Skip to main content

FHFA Alters GSE Policy on REO Sales

Nov 25, 2014

The Federal Housing Finance Agency (FHFA) has directed the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to alter one of their policies relating to the sale of real estate-owned (REO) properties in their current inventory. The change will permit the two companies to sell existing REO properties to any qualified purchaser at the property’s fair-market value, as determined by the GSEs. 

Prior to today’s directive, the Enterprises required homeowners who have been through foreclosure and want to buy their home back to pay the entire amount owed on the mortgage.  This requirement similarly applied to anyone buying the home for the benefit of the previous homeowner.  Under the new policy change for existing REO properties, former homeowners who are able to repurchase their home—or a third-party able to purchase on their behalf – may do so under the fair-market value policy that already applies to other purchasers of REO properties.  

The policy change is limited to Fannie Mae and Freddie Mac REO inventory of single-family homes as of Nov. 25, 2014. Fannie Mae and Freddie Mac have approximately 121,000 properties in their combined REO inventory. Certain property exclusions may apply and will be handled by the Enterprises on a case-by-case basis.

“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said FHFA Director Mel Watt. “It expands the number of potential buyers of REO properties and is consistent with the Enterprises’ practice of requiring fair-market value for those properties.”

Under existing GSE rules, former borrowers must wait a minimum of three years after a foreclosure to be eligible to receive a loan purchased or guaranteed by Fannie Mae or Freddie Mac. The purchase of an REO property for the benefit of the previous owner must also still be intended for use by that owner as their principal place of residence.  

About the author
Published
Nov 25, 2014
What The CFPB’s 2025 Priorities Memo Means For Lenders

As mass layoffs at the agency are paused, law firm Garris Horn’s Senior Partner calls memo’s info, detail a ‘huge win’

CFPB Changes Course, Reportedly Chops Down Staff

Consumer finance watchdog’s headcount reportedly at about 12% as internal memo calls for focus on mortgages, big banks

FHFA Refers NY AG Letitia James To Justice Department For Alleged Mortgage Fraud

Agency claims James falsified documents and records to obtain lower mortgage rates

CFPB Re-Emerges, Offers Regulatory Relief For Certain Small Loan Providers

CHLA calls relief from registration reg a win for small independent mortgage banks

MBA Renews Its Fight Against Trigger Leads

The 'Homebuyers Privacy Protection Act' greets the U.S. House and Senate once again

Over 100 Fannie Mae Workers Terminated Over Alleged Fraud

Employees fired in sweeping anti-fraud effort as new FHFA Director Bill Pulte prioritizes integrity